BackRetail home loans lift HDFC’s stand-alone Q4 profit 11%
On a consolidated basis, net profit increases 16% to `2,415 crore, or `15.32 per share
Premium
Housing Development Finance Corp. Ltd (HDFC), India’s largest mortgage financier, on Tuesday said stand-alone fiscal fourth quarter profit rose 11% to ₹ 1,723 crore, or ₹ 10.92 per share, from ₹ 1,555 crore in the same period a year earlier, as demand for loans from individuals to buy homes continued.
The profit was higher than a Bloomberg survey of 29 analysts, which had pegged it at ₹ 1,685 crore.
HDFC’s loan book increased to ₹ 1.97 trillion in the March quarter, up 16% from ₹ 1.70 trillion a year ago, it said in a statement. Loans to individuals comprise 71% of the firm’s loan book and 85% of the company’s incremental loan growth in 2014 came from this segment.
The demand for loans from individuals had continued to remain strong all through last fiscal year, vice-chairman and chief executive officer Keki Mistry said.
“These are individuals who are the salaried class and buy homes to stay in them and we have seen no co-relation to interest rates and demand for these loans," Mistry said, adding that incremental loans to builders and developers has fallen to 15% now from more than 30% three years ago.
HDFC’s individual loan book grew by 20% after the firm gave out ₹ 6,944 crore of loans during the year, ₹ 5,317 crore of which were sold in the quarter ended March 2014.
Loans to builders and developers grew just 9% “because of the weak economic environment and slower growth in gross domestic product (GDP)" Mistry said. “However, if we get a stable government after the election, there could be a revival in demand for loans for commercial real estate as investment sentiment is likely to pick-up, which will increase demand for office and commercial spaces."
Net interest income, or the difference between interest earned on loans and that paid for deposits, increased 14% to ₹ 7,309 crore from ₹ 6,425 crore a year earlier.
Individual loan disbursements grew by 21% during the fiscal year; the average size of loans increased to ₹ 22.1 lakh in 2013-14 from ₹ 21.6 lakh in 2012-13.
The results did not contain any surprise and the firm is likely to continue growing its loan book at the current pace, said Santosh Singh, an analyst at Espirito Santo Securities India Pvt. Ltd.
“Even for next year we expect HDFC’s loan growth to be at around 20%," Singh said. “We expect the loan growth to remain steady and even if there is a recovery in the economy we do not think loans will grow much higher than 20%."
HDFC’s spread between the interest its earns on loans and spends on funding remained stable at 2.29% in 2013-14 from 2.30% in 2012-13.
The firm’s gross non-performing assets (NPAs) declined marginally to 0.69% in the quarter from 0.77% in the three months ended 31 December.
On a consolidated basis, net profit increased 16% to ₹ 2,415 crore, or ₹ 15.32 per share, from ₹ 2,083 crore, or ₹ 13.33 per share a year ago.
HDFC has three main subsidiaries—HDFC Standard Life Insurance Co. Ltd, HDFC ERGO General Insurance Co Ltd and HDFC Asset Management Co. Ltd. Its main business is lending to individual home buyers and builders.
HDFC Life reported a net profit of ₹ 725 crore in 2013-14, up from ₹ 451 crore in the previous year, while the general insurance business earned a profit of ₹ 195 crore versus ₹ 154 crore in the previous year.
HDFC’s mutual fund business reported a net profit of ₹ 358 crore in 2013-14 from ₹ 319 crore in 2012-13.
The firm’s shares dropped 1.12% to ₹ 877.25 on Tuesday on BSE, while the benchmark Sensex gained 0.28% to 22,508.42 points.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
